There’s a saying in the investment world: “buy on the rumor, sell on the news.” No, this isn’t an encouragement to listen to rumors. Instead, it showcases the general behavioral dynamic of “pricing” in good news before it fully materializes. The idea is that, once the event actually occurs, once the good thing is already in place, the upside of its benefits is already priced in so it’s time to sell.

This is also the case for the 2nd Avenue subway station, as we’ve been asked by so many looking on the Upper East Side.

It would seem logical, now that the new stations are up and running (with much praise and fanfare, might we add) that apartments along the new subway line would experience a sustained uptick in prices immediately and for several months after the ribbon cutting. After all, current and future residents would experience a substantial increase in their quality of life based on both the proximity and utility of the new line.

That said, condo prices experienced only a 5.12% increase near the station from 2016-2017, and are not expected to pop that much further. Why? Because the increased value of the line was already priced in. Roughly speaking, once some initiative is underway, the relative value of that initiative begins to be priced in roughly 1/2 to 2/3 of the way towards its completion … when the light at the end of the tunnel can be seen (pun intended). At that point, the experience of the utility of that thing merely catches up with expectations.

As you might imagine, however, this is a bit different for the rental market, which is representative of a much more transient demographic. During construction, renters who could pay more to live somewhere else did; renters who were willing to put up with the dust and the noise in exchange for lower relative rent did. Now, those rents are likely to jump up to the level of median rents in the neighborhood, plus a bit more due to the premium from the added transportation options. This is all relative, of course, and based on the overall health and trajectory of the rental market, which at this time is marked by concessions due to its overall softening.

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